Wednesday, November 12, 2008

Parallel importation: Cheap books, but at what price?

My book Perfect Timing is about to be published in a Vietnamese translation. It will sell for 20,000 Dong, about A$1.45. I’ll receive 5% of that price on each copy, a princely seven cents, so I’m not about to retire.But what this makes clear is that books are much cheaper in Vietnam than Australia. I could buy 15 copies of my Vietnamese edition for the price of an average Australian paperback. So, why is the book cheaper? The paper and print quality will be lower than the Australian edition for one. Another is there’ll be several more thousand copies printed in Vietnam than were ever printed in Australia, but the book will still be a tiny blip in a market of over 80 million readers. And those readers are much poorer than readers in Australia. To them, spending 20,000 Dong on a book is a luxury purchase.So the price of books is relative from one country to another. The return to me from sales in Vietnam will be small financially, but large in the sense that I will have many more readers. I’m assisting with a tiny bit of cultural exchange as well. These are immeasureable benefits with no financial value.But they’d still be there if I was lucky enough to sell US rights to my book, although the financial implications would be very different. I’d actually make some money – again, not enough to retire on, but enough perhaps for a new computer or new car.As an author, I can trade my rights in different markets for different reasons. Trading of rights is the commercial basis for life as an author. We can sell Australian publishing rights, rights for translation into Vietnamese or rights to an American edition. This is intrinsic to our continued livelihood. Quite a few authors have different publishers in different markets. Australia, in line with most major book markets in the world, including the United States and United Kingdom, is currently a “closed “ market. Books can only be published here by the entity who holds the rights to the Australian territory. These rights are saleable parts of the bundle of rights that make up an author’s copyright. For example, popular author Jodi Picoult is published by Allen & Unwin in Australia, but by Hachette in the UK and Atria in the USA.However, there are moves afoot to take some of these rights away from us. The moves are being led by booksellers, particularly, Don Grover of Dymocks (Sydney Morning Herald, September 4, 2008). Booksellers are usually an author's best friends, but not Don at the moment.Why? Don wants an open market. He wants to take away the right of Australian authors to transact their rights in different markets. His argument is driven by the profit motive of course. Don claims the wholesale price of books is cheaper in the United States through competition. And there is undoubtedly more competition in the US in the book industry than there is in Australia. The US book market is more than 10 times the size of Australia. Don also says books are expensive in Australia because the Australian publishing industry is artificially protected from competition. This is his subtle reference to our Copyright Act and the protection it gives to rightsholders – like authors.But the US is by no means an open market. Nor should it be. Both the United States and Australia are separate copyright territories, and books are licensed into each territory by their rightsholders. Few Australian books receive much attention in the US. The Australian market is far more competitive than the US market because Australian books have to compete with those from the US and the UK. Under our law as it currently stands, all books published outside Australia must be made available in Australia within 30 days of their publication, or the rightsholder loses their exclusive licence to publish the book in Australia.Grover’s suggestion is for those rightsholders to lose their right. The Council of Australian Governments (COAG) announced at the end of July that it had asked the Productivity Commission to review Australia’s copyright laws so far as they related to the parallel importation of books. Grover is pushing hard to destroy Australia as a distinct publishing territory. In his argument, he ignores the fact that the US and UK are closed markets. He also ignores the fact that book prices in open market territories such as New Zealand and Singapore are equal to or greater than those in so-called closed markets.His fallacious argument is designed merely to increase Dymock’s profit margins, not to make books cheaper. Dymocks could make book prices cheaper in their stores overnight, if that was their real interest. How? Dymocks receives a minimum 40% discount on the Recommended Retail Price (RRP) on books it buys from publishers so they have nearly half the price of the book to play with in -- and often more when they negotiate bigger discounts. We don’t know how much of the 40% of the price of a book is Dymocks profit, but the company appears to be doing well. And it’s not as if Dymocks is a risky business, like drilling for oil. Their purchases from publishers are on a sale or return basis. What they haven’t moved off the floor after six weeks gets sent back to the publisher for credit.In contrast, life is bit tougher for the publisher, and much more so for the poor author. When a book is sold by Dymocks, the publisher gets about 12% (at least ABS statistics from 2004, the most recently available, show that) and the author generally receives 10%.What’s clear from this is Dymocks is in the best position to immediately reduce the price of books by passing on part of its discount to consumers. No need to change our copyright laws. No need to destroy the livelihood of Australian authors and their ability to transact their rights both here and internationally for whatever those markets will pay.